Sellers boast “50% NCB” to prove claim-free status. But NCB belongs to the owner, not the car—and fraudsters exploit this loophole.
What is NCB (No Claim Bonus)?
NCB (No Claim Bonus) is a discount on your premium (the amount you pay annually for insurance) that you earn for not making any insurance claims during the policy year.
In simple terms: NCB is a reward for being a careful driver. Every year you don’t file a claim, your insurance gets cheaper.
How NCB Works
| Claim-Free Years | NCB Discount | Example Premium |
|---|---|---|
| 0 years (new policy) | 0% | ₹25,000 |
| 1 year | 20% | ₹20,000 (save ₹5,000) |
| 2 years | 25% | ₹18,750 (save ₹6,250) |
| 3 years | 35% | ₹16,250 (save ₹8,750) |
| 4 years | 45% | ₹13,750 (save ₹11,250) |
| 5+ years | 50% | ₹12,500 (save ₹12,500) |
The catch: This discount follows YOU (the owner), not the car. When you sell the car, the NCB stays with you for your next vehicle.
In simple terms: You can transfer NCB from your old car to your new car, but the buyer starts fresh at 0% NCB.
The NCB Fraud Tactics
Sellers exploit NCB to create the illusion of a claim-free vehicle. Here are three common tactics:
1. Showing Old NCB While Hiding Recent Claims
Seller shows you a policy with 50% NCB from 2022, but conveniently “forgets” the 2024 policy showing 0% NCB after a ₹1.8 lakh accident claim in 2023.
What you see: “This car has 50% NCB—never had a single claim!”
The reality: Major accident happened. NCB was lost. They’re showing outdated documents.
2. Cash Repairs to Maintain NCB
Owner has a ₹45,000 accident. Instead of filing a claim (which resets NCB to 0%), they pay cash to preserve their 50% NCB (worth ₹12,500 annually). Over 5 years, losing NCB costs ₹62,500, so paying ₹45,000 cash saves ₹17,500 while hiding the accident.
What you see: Current policy showing 50% NCB = claim-free car
The reality: Major accident repairs done in cash, hidden from insurance records
3. Filing Claims Under Third Party Only
In simple terms: Third Party (TP) insurance covers damage you cause to OTHERS. Own Damage (OD) insurance covers YOUR car’s damage.
Seller hits another car (₹80,000 TP claim filed) but pays cash (₹55,000) to fix their own car to avoid OD claim. NCB only resets if you file OD claim, so they maintain NCB despite being in an accident.
What you see: “No OD claims, look at my NCB!”
The reality: Car was in accident. Only TP claim shows.
Why NCB Isn’t Transferable to Buyers
Critical fact: NCB is attached to the policy holder (owner), NOT the vehicle’s registration.
What this means:
- Seller with 50% NCB transfers it to their next car purchase
- You (the buyer) start fresh at 0% NCB
- The car’s NCB history is irrelevant to your insurance cost
Example: Mr. Sharma sells his Honda City with 50% NCB. He uses that 50% NCB on his new Fortuner. You register the City in your name and start at 0% NCB. The car doesn’t “carry” any NCB with it.
In simple terms: NCB follows the person, not the vehicle. The seller’s NCB tells you NOTHING about the car’s claim history.
How to Protect Yourself
Never rely on NCB as proof of claim-free status. Instead:
1. Request Complete Insurance History
Ask for:
- Current insurance policy (check NCB)
- Previous 3 years’ policies (check for NCB resets)
- Claim settlement letters (if NCB dropped, claims were made)
Red flag: Seller shows only current policy, refuses older documents
2. Get a CarQ Vehicle History Report
A CarQ vehicle history report reveals all OD/TP claims across insurers, claim amounts and dates, total loss status, and NCB progression year-by-year (resets indicate claims).
Cost: ₹1,500-2,500 | Prevents: ₹50,000-2,00,000 overpayment
3. Cross-Check Service Records
If seller paid cash for repairs (to protect NCB), service records show body shop work, panel replacement, or painting that matches when NCB mysteriously stayed intact. Learn to verify service history →
Key Takeaways
✓ NCB is owner-specific: Doesn’t transfer to buyer ✓ High NCB ≠ claim-free car: Sellers maintain NCB through cash repairs ✓ Check NCB progression: Resets indicate claims ✓ TP claims hide OD damage: Look for both types ✓ Get CarQ report: Complete claim history across insurers ✓ Never pay premium for seller’s NCB: Has zero value to you
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